2.5 Economic Growth

Question 1

economic stagnation

Answer 1

slow economic growth

Question 2

stagflation

Answer 2

high inflation, but low economic growth

Question 3

Reflation

Answer 3

rise in GDP occurring in a recession

Question 4

Gross Domestic Product (GDP)

Answer 4

The total market value of all goods and services produced within the nation’s borders, over a period of time
at market prices, so includes VAT, so GDP will be higher than actual national income

Question 5

Gross Value Added (GVA)

Answer 5

GDP - indirect taxes on products
So the overall what they add to the value of the product

Question 6

Gross National Income (GNI)

Answer 6

GDP + net overseas income through primary income
- e.g dividends, interest rates

Question 7

Gross National Product (GNP)

Answer 7

The total value of all goods and services produced by the country’s residents, no matter where they are making this money.
Excludes money made by foreigners in the country

Question 8

Net National Income

Answer 8

National Income - depreciation

Question 9

Actual growth

Answer 9

‘short term growth’
the real growth in quantity of goods and services
expands AD and ppf point

Question 10

Potential growth

Answer 10

‘long term growth’
change in productive potential of economy
expands LRAS and ppf curve

Question 11

Hysteresis

Answer 11

when economy doesn’t fully recover from a recession
shifts trend rate of growth, due to permanent loss of human and physical capital
as people who lost their jobs may not of got them back etc.
GDP still rises overtime, but slows down the rate

Question 12

Sustainable growth

Answer 12

growth in the productive potential that doesn’t use non-renewable resources
growth that can sustain without having to finance growth with additional equity or debt